A controversial new Ohio law aimed at restricting the collective-bargaining rights of 360,000 unionized public employees has led to a major political fight and a voter referendum in this battleground state. Gwen Ifill reports on the issue that has both sides spending millions to mobilize their voters for an off-year election.

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JIM LEHRER:

A major political battle is under way in Ohio. It's over a new law aimed at restricting collective bargaining rights.

Gwen Ifill reports.

PROTESTERS:

No on two! No on two!

GWEN IFILL:

There's a ground war going on in Ohio, rally to rally.

MAN:

When somebody comes and tells you that the solution to the problem is to take your rights away, that's a problem for you, for every working person.

GWEN IFILL:

Door to door.

MAN:

How you doing, sir? My name is Steve.

MAN:

Steve, good to see you.

MAN:

I am a volunteer with the We Are Ohio campaign.

GWEN IFILL:

Phone bank to phone bank.

MAN:

Your yes vote on issues two and three is critical to getting government spending under control, protect taxpayers, and preserve the freedom of Ohioans to choose their own health care.

GWEN IFILL:

And all over the airwaves

WOMAN:

Senate Bill 5 makes it illegal for nurses to negotiate for safe staffing levels. We can stop Senate Bill 5 by voting no on issue two.

NARRATOR:

Ohio is hurting. Families and communities are struggling. But with issue two, we can save taxpayer dollars and fix our state.

PROTESTERS:

We will fight! We will fight!

GWEN IFILL:

It's a battle similar to ones waged earlier in Wisconsin and Indiana between unionized public employees and lawmakers and taxpayers who say those unions are bankrupting local governments.

MAN:

Hi. We're trying to encourage a no vote on issue two.

GWEN IFILL:

In Ohio, thanks to more than a million signatures, the dispute will be settled at the ballot box in a referendum that attempts to repeal a six-month-old law curtailing collective bargaining for 360,000 public employees.

John Green teaches political science at the University of Akron.

JOHN GREEN, University of Akron: There's been a lot of attention on this battle here in Ohio, partly because the issue of public sector unionization is important, but also because Ohio is a powerful symbol in national politics. It's a battleground state that's very important in congressional and presidential elections. But it's also a bellwether state. It tends to predict national trends very accurately.

GWEN IFILL:

The law, as passed, would restructure union negotiations, cut back on seniority privileges, and require public employees to pay more for health insurance and pension benefits.

Republican governor, John Kasich, who closed an $8 billion budget gap after he was elected, says he needs this law.

GOV. JOHN KASICH, R-Ohio:

Ohio has been in deep trouble. And we have got high taxes, not just at the state level, but at the local level. And if you don't control your costs, you keep raising taxes, you're going to kill jobs.

So, it's a tough issue. It's tough for everybody. You know, look, I come from a union family. My father carried mail on his back. And sometimes it's hard for people, with all the noise out here and all the ads and everything else, for people to understand exactly what's at stake here. But it's just really — it's not about going after a union, and it's not about trying to punish somebody. It's really about creating an environment where you can control your costs so you can create jobs. That's what it's really about.

GWEN IFILL:

A lot has changed in Ohio since President Obama carried this state in 2008. In 2010, Republicans swept every single statewide race. But more now disapprove than approve of the governor they elected last year. So this is a test, and both sides are spending tens of millions of dollars to ace it.

MAN:

And I'm calling from the Cleveland Fire Department.

GWEN IFILL:

The debate touches all kinds of nerves. Union workers say the law will increase school class sizes and compromise public safety.

Annamae and John Heiman spend their free time working to repeal the law. She's a teacher. He's a fireman.

ANNAMAE HEIMAN, teacher:

It's very far-reaching. And people need to know that, that it's not — we're not just talking about our pay. We're talking about the children of my classroom. We're talking about the people that he goes and rescues out on the freeway.

JOHN HEIMAN, firefighter:

Staffing levels decrease, I'm running into a burning building and something happens to me, who is going to save me? I'm there to hopefully provide and protect the public, and then when it's my turn, what happens? Well, we laid that guy off. We couldn't afford to pay him today, so, I'm going to take a day off.

GWEN IFILL:

But the argument is flipped on its head by small businessmen like Steve Kryder, who was selling apple butter from his farm at a local festival outside Toledo last weekend.

There's going to be a vote in November.

STEVE KRYDER, businessman:

Yes. Right.

GWEN IFILL:

Where are you going to come down?

STEVE KRYDER:

Oh, I will vote — I will vote for issue two.

GWEN IFILL:

Why?

STEVE KRYDER:

Because I believe the employer, us, the taxpayer, should have the ultimate control of what gets done. And that's really the only way to bring that back to this situation. You look at — you look at places like Detroit, which have been governed by union control, and it's done them no good over the long stretch.

MICHAEL BELL, mayor of Toledo, Ohio: How you doing? You hanging in there?

GWEN IFILL:

Toledo Mayor and former firefighter Michael Bell also says it's a matter of control. He argues local governments need the flexibility to balance their budgets.

MICHAEL BELL:

What we're doing here is, we are in the process of making hard decisions. I realize at all times, because can become very vocal, that there are people that are mad about the position I have taken. But, for me, I believe that in order to keep people working, and especially in order to governmental employees working, if I don't have the flexibility, then I'm going to have to lay a bunch of people off.

GWEN IFILL:

In many ways, the Ohio dustup takes Washington's debate over jobs, spending and the role of government, and plays it out in real time.

NINA TURNER, (D) Ohio state senator: Good morning, young sir, how you doing?

GWEN IFILL:

Democrat Nina Turner is a state senator from Cleveland.

NINA TURNER:

The citizens of my district, when they dial 911, they want to know that help is on the way, that the firefighters, the police officers, the EMS workers, that they are on the way. The fact that they have passed this bill and rammed it down the throats of our public sector workers in this way puts everybody in peril.

What we do in Ohio right now in November is really going to send the battle cry across this nation that all eyes are on Ohio and it's up to us and that we can't go back and we won't go back. People fought for these rights, and we got to keep the rights for the next generation.

GWEN IFILL:

Each side is counting on the referendum to provide a launching pad for the 2012 campaign.

Sam Bain is co-chairman of Ohio's College Republicans. He says his goal is to limit President Obama to one term.

SAM BAIN, Ohio College Republicans:

People are striving for something different, striving for real hope, real change, not what they were falsely promised years ago back in 2008. They want something different, something real, something that is substantive that they can stand on.

GWEN IFILL:

Democrats hope next month's balloting will remind their voters what's at stake.

NINA TURNER:

The Democratic base is very motivated now, knowing what happened in 2010, that Democrats lost every single statewide office. And, you know, Gwen, elections have consequences. So, hopefully, not only are Democrats awakened. Hopefully, all folks of good consciousness are awake, and they understand that it is consequential that the types of people that you put in office and their ideologies and how they form public policy has an indelible mark.

GWEN IFILL:

John Green says the wild card, of course, will be the economy.

JOHN GREEN:

And one of the things that ties together 2008, 2010, and 2011 and perhaps 2012 is the poor state of the economy. One of the reasons that Barack Obama was able to do well in this state is frankly because it's perceived that the previous administration had not done a good job with the economy.

One of the reasons that John Kasich was elected governor was because of perception that the economy wasn't going well. And the economy is not getting a lot better, so this is potentially a problem for both sides.

WOMAN:

Can we count on your support?

GWEN IFILL:

It will be an expensive fight, with both sides using maximum effort to get their voters to the polls in an off year. But in a swing state that could go either way next year, that effort is just a down payment.